Conygar Inv Regulatory News (CIC)

30 November 2011

THE CONYGAR INVESTMENT COMPANY PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2011

The Conygar Investment Company PLC, the property investment and development company announces its results for the year ended 30 September 2011.

HIGHLIGHTS

·; 2011 was another successful year for Conygar.

·; NAV per share of 155.2p was up 3.1% (2010: 150.5p). EPRA NAV per share increased by 2.5% to 153.9p (2010: 150.1p).

·; Final dividend proposed for the year of 1.1p per ordinary share.

·; Progress made on the development land bank with expenditure in the year of £14.8 million. Purchased 93 acres of residential development land at Haverfordwest, Pembrokeshire. Conditional disposal of 9 acres to Sainsbury's to build a 60,000 square foot food store.

·; Strong cash flow and debt capacity for future acquisitions, with total cash and undrawn committed facilities exceeding £85 million.

·; Sold £13.5 million of investment properties.

·; Share buy back: the Group acquired 17.2% of its ordinary share capital at a weighted average price of 116.1p per share.

Summary Group Net Assets As At 30 September 2011

Robert Ware, Chief Executive, commented:

"The outlook for Conygar remains positive and the benefits of our strategy are coming through. The balance sheet remains strong and liquid, with £85 million available for further acquisitions. We continue to rigorously search for undervalued assets and development opportunities and realise assets where we believe we can add no

further value. We are investing in our development projects, which will produce good returns in the medium term, and our investment property portfolio continues to hold up very well. Since the financial crisis started in 2008, we have grown in net assets, been consistently profitable and guarded our liquidity for the opportunities which will surely come. Conygar is stronger now than it was at the start of the financial crisis and we remain very positive about the future for your business."

Enquiries:

The Conygar Investment Company PLC

Robert Ware: 020 7258 8670

Peter Batchelor: 020 7258 8670

Oriel Securities Limited (Nominated Adviser)

Michael Shaw: 020 7710 7600

Neil Langford: 020 7710 7600

Temple Bar Advisory (Public Relations)

Alex Child-Villiers: 07795 425580

Chairman's & Chief Executive's Statement

Results

The year ended 30 September 2011 has been another successful and effective year for Conygar. In these difficult economic times, we have continued to grow net asset value per share and have a strong balance sheet. We are pleased to be able to report a net asset value per share of 155.2p, which is an increase of 3.1% from last year. The major components of that growth are the profit after tax of £1.1 million and the impact of the share buy back. Net asset value was £158.5 million compared with £176.6 million at 30 September 2010, however, the Group spent £24.6 million on share buybacks during 2011 and paid a dividend of £1.2 million. Excluding these, net assets increased by 4.3%. On an EPRA basis net asset value per share increased by 2.5% to 153.9p.

The profit before taxation for the year was £1.8 million (2010: £14.9 million). However, the previous year included a £5.5 million profit from sale of properties and a revaluation gain of £7.2 million. Net property income was £10.0 million (2010: £12.4 million) before financing and overheads. The uncertain timing of our acquisition, sales and development expenditure mean that our profits cannot be expected to be a smooth progression. We are not an earnings or income yield business: our focus is on net asset value growth.

However, the Group has generated profits after tax of £29.4 million in the last three years, with a return on equity averaging 7.1% pa. This is despite a deliberate policy of holding cash for investment opportunities which depresses returns. If adjusted for cash, the net return rises to 16.4% pa which, given the economic turmoil since October 2008, is a creditable performance.

The Group's investment properties as at 30 September 2011 were independently valued at £139.2 million and have an annual contracted rent roll of £12.1 million. On a like for like basis with last year, the portfolio remained broadly flat, showing a small overall gain of £401,000. In view of the secondary and regional nature of the portfolio, we are pleased that value was maintained, reflecting the active asset management work protecting value.

The development land bank continues to be held at cost of £29.4 million, after additions of a further £14.8 million during 2011. We will revalue it once the various planning issues are sufficiently advanced so that a sensible appraisal can be produced. These projects represent a considerable amount of potential upside and we continue to invest time, money and effort into bringing them to fruition. We are particularly encouraged by our conditional disposal of 9 acres at Haverfordwest to Sainsbury's, for a food store, with whom we hope to develop other opportunities. The waterfront projects move ahead, albeit in a difficult market and we are pleased to have been able to access certain infrastructure grant funds. All of these matters are covered in more detail under Business Review.

Acquisitions and disposals

In November 2010, we purchased 86 acres of land at Haverfordwest, Pembrokeshire, close to the town centre for £14 million, which has outline planning consent for 900 residential units. In June 2011, we acquired a further 7 acres adjoining the site for £0.3 million.

The Group disposed of four investment properties during the year at Whetstone Business Park, Leicester; Southgate Retail Park, Derby; Fishers Grove, Portsmouth and Caswell Road, Northampton for total net proceeds of £13.5 million, generating a small surplus of £167,000 over valuation. We will continue to dispose of assets as opportunities arise and where no further value can be added by the Group.

Dividend

The Board is pleased to recommend a final dividend of 1.1p per ordinary share in respect of the year ended 30 September 2011 to be paid on 10 January 2012 to shareholders on the register on 9 December 2011. This is an increase of 10% over last year which reflects the continued progress of the business. The Board has decided against the payment of interim dividends.

Share Buy Back

Having announced the share buy back programme last year, the Group acquired 21,237,981 ordinary shares representing 17.2% of its ordinary share capital, at a weighted average price of 116.1p per share. This used cash of £24.65 million and, as a result of the buy backs, net asset value has been enhanced by approximately 7.6 pence per share or 5.05%.

We continue to be disappointed by the discount of the share price to the net asset value per share and will utilise the share buy back authority where it makes sense to do so.

Financing

At 30 September 2011, the Group had cash of £35.7 million available to pursue investment opportunities which, when combined with funds available from the committed bank facility, increases to £85 million. This excludes any further finance available in respect of new acquisitions. Bank debt was £34.8 million compared with £35.6 million last year. The Group continues to have net cash and bank debt was at 25% loan to value overall.

During November 2011, the Group re-couponed its existing interest rate swaps from 2.38% to 1.33%, having already reduced them during the year from 5.2%. Aside from reducing the on-going interest rate charge in the income statement, we retain the hedging protection on 85% of our external bank debt and the weighted average cost of all debt including margin has fallen to 4.44%.

Also during November 2011, the Group drew down £33 million from its facility with Lloyds Banking Group for potential use on acquisitions. This increases bank debt to £64.4 million or 46% loan to value, ignoring cash. The Group takes the view that the ability to deploy cash quickly remains a major competitive advantage when competing for acquisition opportunities.

Summary of Group Net Assets

The Group net assets as at 30 September 2011 may be summarised as follows:

Outlook

It is extremely difficult to determine the outlook in a world that veers from one crisis to another. Our policy remains that of sticking to what we know best and rigorously searching for undervalued assets and development opportunities. We will continue to realise assets where we believe we can add no further value.

Generally, the banks still have not de-geared their property books and those that have, now require more capital to cover other exposures, with the European crisis adding further uncertainties and capital requirements. Many borrowers still have to re-finance expiring loans, but recent experience shows that banks are reluctant to face the challenge of non-performing loans and asset value shortfalls. The full effects of the austerity measures have yet to bite, and the coming years will be difficult. We have been consistent in our message throughout: this situation requires careful management, patience and, most of all, nerve.

For Conygar, the outlook remains positive and we are starting to see the benefits of our strategy coming through. The balance sheet remains strong and, most important of all, liquid. Our development projects are starting to bear fruit and we continue to invest in these projects which will produce good returns in the medium term. Our investment property portfolio continues to hold up very well in a difficult environment owing to the massive amount of work by our team on asset management and we continue to evaluate opportunities in a highly selective and disciplined way. We would like to announce another deal but we will not overpay just to be able to do that.

We believe that Conygar is stronger today than it was in 2008, when the world went awry. We have shown growth in net assets, have been consistently profitable and have guarded our liquidity for the opportunities which will surely come, including where appropriate, share buy backs.

We remain very positive about the future for your business.

N J Hamway R T E Ware

Chairman Chief Executive

Business Review

INVESTMENT PROPERTIES

Summary of portfolio

Asset management

At 30 September 2011, the contracted rent for the investment property portfolio was £12.1 million with an ERV of £13.7 million. The ERV of vacant space is £1.6 million of which Advantage, Reading and Brunswick Point, Leeds account for 50% by rental value. This has reduced from 71% in 2010 owing to the successful letting of part of Advantage, Reading (see below). The overall vacancy rate in the portfolio is 11.19% down from 14.03% in 2010 and whilst there remains much to do this is a pleasing trend. We continue to seek out occupiers and can afford to be highly competitive, however, the challenge remains a significant one, particularly outside London.

In terms of lettings:

·; We agreed 12 new lettings contributing £616,141 pa of new income at an aggregate premium of 1.03% to ERV.

·; We agreed 8 lease renewals retaining £681,691 pa of income at an aggregate discount of 1.75% to ERV.

·; We agreed 3 rent reviews at £70,500 pa of income at an aggregate discount of 6.37% to ERV.

The highlights include:

Advantage, Reading

In March 2011, we let 8,448 square feet at Advantage, Reading to Atex Group Limited on a twelve year lease, with a tenant only break at year seven. The rent is £185,856 pa, subject to fixed uplifts for which the tenant is receiving a two year rent free period. We have agreed to finance the tenant fit-out of £350,000 which will be repaid in eight quarterly instalments. The tenant has also taken the right of first refusal over another floor. This is an important letting as this is the largest void in the portfolio and Reading is a competitive occupier market. Having attracted one occupier, we are already seeing interest from other potential occupiers.

Unit 11/13 Brunel Centre, Bletchley

We have let a 2,975 square foot, previously vacant, unit to Brighthouse on the basis of 10 years from March 2011, with a tenant break after five years. The rent will be £17,500 pa rising to £37,000 in year two and £40,000 thereafter. We have made a capital contribution of £60,000 towards their fit-out costs. This both reduces the void and enhances the value of this property.

Kingscourt Leisure Complex, Dundee

A 5,666 square foot unit has been let to Laser Quest for a period of 10 years from April 2011 at £26,895 pa, with a mutual break after five years. This unit has been vacant since the property was constructed, so is a significant breakthrough and has generated interest in two further vacant units which are currently under negotiation.

Armytage Road, Brighouse

A new lease was completed to the existing tenant, Owens Corning, on the basis of 10 years from September 2011, with a tenant only break in 2016. The passing rent of £155,000 pa has been maintained with a six month rent free period.

Sandwell Business Park, Oldbury

The tenant, Cadbury UK Limited, has now undertaken a £2 million refurbishment of this property and has re-occupied it as one of the four core Cadbury distribution hubs in the UK. This re-affirms the commitment of Cadbury to this 128,305 square foot warehouse/distribution unit which is let to them until September 2020 at £725,000 pa.

We have also begun a number of refurbishment initiatives, incurring some £1,079,000 of capital expenditure during 2011 and this level of capital expenditure will likely continue in 2012. In particular, we are upgrading Waterfront Business Park, Fleet; York House, Felixstowe and Silver Court, Welwyn Garden City. However, we have chosen to defer our proposed £2 million refurbishment of Brunswick Point, Leeds. The extremely weak occupier market in Leeds means little likelihood of realising adequate value for that level of expenditure and the funds can be better employed elsewhere.

By their nature, most of our transactions remain relatively small but the team is highly focussed on actively managing the portfolio to protect the income and cash flow. As ever, we try to ensure close contact with tenants and to chase debts promptly. Clearly we cannot buck the market and, in particular, retail tenants are under enormous pressure. We try to work with them to manage the situation, often with success, but occasionally we must bow to the inevitable. We typically collect 93-98% of rent within ten days and arrears are less than 1% of the rent roll.

Disposals

The Group disposed of four investment properties during the year at Whetstone Business Park, Leicester; Southgate Retail Park, Derby; Fishers Grove, Portsmouth and Caswell Road, Northampton for total net proceeds of £13.5 million, generating a small surplus of £167,000 over valuation.

The largest asset disposed of was Whetstone Business Park, Leicester which accounted for £6.97 million of the total net sale proceeds, having been acquired as part of the Lamont portfolio in 2009 for £6.58 million. It was over rented with a tenant not in occupation and wishing to exit the lease in 2014. Whilst the income was good in the short term, we could only see downward pressure on the valuation, so we opted to sell and achieved a good price in this market.

The other significant asset was Southgate Retail Park, Derby which was sold for £4.74 million or 3.5% ahead of valuation. This property had a number of vacant retail units, with little occupational demand in a competitive over-supplied market.

We will continue to dispose of assets as opportunities arise and where no further value can be added by the Group. 

Valuation

The investment property portfolio has been independently valued by Jones Lang LaSalle (who acquired King Sturge LLP in 2011) at £139.2 million as at 30 September 2011, comprising £97.4 million for the TAP portfolio and £41.8 million for the Lamont portfolio. The total portfolio increased in value by £401,000, so broadly flat compared with 2010.

There continues to be considerable downward pressure on values of property outside London owing to a flat investor market, scarce finance and tenants' businesses operating in a tough economic climate. Active asset management is required to protect value and our investment in capital expenditure is all financed out of surplus cash flow from the portfolio.

Development Projects

Haverfordwest

In November 2010, we purchased 86 acres of land at Haverfordwest, Pembrokeshire, close to the town centre for £14 million. This has planning consent for 900 residential units. We subsequently acquired a further 7 acres adjoining our site for £0.3 million taking our total site to 93 acres.

We have now exchanged contracts with Sainsbury's for the sale of 9 acres for a supermarket, subject to the obtaining of a suitable planning consent. We intend to submit a planning application early next year for a retail food store comprising 60,000 square feet of sales floor space, a restaurant, a 500 space car park and filling station. Our application will also include proposals for circa 800 residential plots on our remaining site. We have held a joint public exhibition of the proposals with Sainsbury's and we can now finalise our application.

The acquisition of this site in this challenging economic climate was, we believe, opportune at a cost of less than £15,000 per plot. The addition of Sainsbury's will significantly change the economics of the project and, if successful, will enable us to bring forward the residential development, having more than covered all our infrastructure and services costs through the net proceeds from Sainsbury's. It is too early to ascertain the exact figures until the planning application is submitted and consultation underway.

Holyhead Waterfront

The planning application has been submitted for a mixed use development. The application includes plans for 385 apartments and townhouses, a 500 berth marina, 50,000 square feet of retail, leisure, restaurants, hotel and office space, with a very flexible design layout and in prime location overlooking the marina. We are also making a provision for various local amenities and visitor attractions. The site covers in excess of half a mile of water frontage and is being developed jointly with Stena Line Ports Limited. Conygar has spent £8.61 million to date and additional funding and development partners will be introduced as the scheme progresses.

The Council has now received all statutory and non-statutory consultation responses and we have held various meetings with local planning officers to establish what further work is required in order that the Council can take the application forward to a determination at committee. As anticipated, we have had a wide range of responses some of which require further work. We are confident that all issues can be adequately addressed by our design team and we are seeking a determination during the first quarter of 2012.

Parc Cybi Business Park, Holyhead

We continue to market our development site at Parc Cybi, and discussions are ongoing with several transport operators, as well as the logistics industry supporting the nearby £15 billion nuclear power project at Wylfa. We were pleased to have received the go-ahead from the Welsh Government Business Minister for the purchase of a further 9 acres in order to develop a transport hub and lorry park for approximately 140 heavy goods vehicles.

We hope to submit a planning application in respect of this much needed facility within the next three months. This has taken a considerable amount of lobbying by our development team but we are delighted that the project has now received the political support it requires. In addition, the employment creation associated with the scheme has enabled us to secure the offer of substantial funding from the Wales European Funding Office.

Finally, the Welsh Government has recently announced that Anglesey will be designated as an Enterprise Zone and whilst the exact benefits are still being determined, it is highly likely that enhanced capital allowances and business rate reliefs will form part of any incentives, giving developments such as Parc Cybi a major boost.

Fishguard Waterfront

In October 2011, we submitted, in conjunction with Stena Line Ports Limited, a planning application for a mixed use marina development at Fishguard in West Wales. The main elements of the scheme include a 450 berth marina with workshops, stores and ancillary facilities; 253 new residential apartments incorporating extensive landscaped gardens and a 19 acre platform for the potential expansion of the existing Stena Line port. The end value of the development is expected to be in excess of £100 million.

We are particularly pleased to be working with our partners at Holyhead, Stena Line, and to have received the support of Pembrokeshire County Council and The Crown Estate, who own much of the surrounding harbour area. The proposal will transform the area, create much needed employment opportunities and further enhance and ensure the future of the commercial port.

Clearly, the planning process for such a comprehensive proposal will attract considerable scrutiny but we believe the economic drivers for the plans are strong and the backing received thus far is extremely encouraging. We expect to be able to report further progress in May 2012, by which time we are hopeful of receiving planning consent.

Fishguard Lorry Stop and Distribution Facility

We have recently completed the acquisition of this 11 acre site in Fishguard for £330,000 which is sited near the Stena Line owned port. In May 2011, we obtained outline planning consent for a lorry stop and distribution park. The proposal includes a secure 24 hour truck stop together with approximately 190 spaces for tractor and trailers, vehicle refuelling and wash facilities, plus an amenity building. There will also be around 30,000 square feet of industrial and warehousing units to support the lorry stop.

As this project will also offer significant employment and infrastructure benefits to the community, we believe we will secure an offer of grant funding from the South West Wales Property Development Fund and discussions are currently taking place with both hauliers and the port operator, Stena Line. It is our intention to start development once we have secured sufficient pre-lets.

Pembroke Dock Waterfront

Work on the various design and engineering solutions continues at this £100 million development of the

Pembroke Dock Waterfront in West Wales. We were pleased to report that the client group, comprising

Pembrokeshire County Council, the Welsh Government, the Crown Estate and the Milford Haven Port Authority, recognising the current state of the market, has consented to our adopting a phased approach, which is a massive boost to the project, as it permits the first phase of the project to begin sooner than would otherwise have been the case. We are in discussions with several potential tenants with a view to moving ahead with the first phase, which in turn will kick-start the entire development.

King's Lynn, Norfolk

In August 2011, we acquired a 6 acre residential development opportunity, which was under the control of the Irish NAMA vehicle, with planning permission for 94 dwellings near to King's Lynn, Norfolk for £799,000. In addition to the residential development, the site offers some potential for mixed or commercial uses, subject to planning. We are currently looking at options to improve the scheme which offers good potential upside, subject to current market conditions.

Aberystwyth

In November 2011, in conjunction with Sainsbury's, we have taken an option to purchase a site at Aberystwyth Park Lodge, Aberystwyth. We are looking to develop a food retail supermarket together with a petrol filling station and car park. This is at a very early stage but work has commenced on a planning application which will be submitted as soon as possible. We hope to be able to report further on this in due course.

Summary of Development Projects

The expenditure in the year on our development land bank amounted to £14.8 million, reflecting the progress made on all development projects. Our total investment to date is now £29.4 million at cost (analysed below) or 29p per share. We consider that, as the projects continue to progress, they will deliver potentially significant upside.

Our three waterfront developments are expected to develop in excess of 1,200 waterside homes and 1,400 marina berths, together with mixed use supporting development. Our other development sites, such as Haverfordwest, add the potential for a further 890 homes and the possible development of a new 60,000 square foot Sainsbury's retail food store. The two development projects at Parc Cybi, Holyhead and Fishguard Lorry Stop complement the waterfront developments through the development of much needed lorry stop and storage facilities. There are several other projects at an early stage or in negotiation.

It is extremely difficult to provide shareholders with a meaningful guide as to valuation of the various projects. The mysteries of the planning process and the early stage of the projects make accurate costing and predictions unreliable, in our opinion. It is our intention to introduce third party valuations as soon as it is meaningful to do so. Suffice to say, we are comfortable that carrying the projects at cost is the prudent thing to do. However, we believe that there is significant upside in these projects which will become evident over the medium term.

FINANCIAL REVIEW

Net Asset Value

The net asset value at the year end was £158.5 million (2010: £176.6 million) representing a 10.2% decrease in the period. The primary movement was the £24.6 million spent on purchasing own shares.

On an EPRA basis, the net asset value is:

The EPRA net asset value is calculated on a fully diluted basis and excludes the impact of hedging instruments as these are held for long term benefit and not expected to crystallise at the balance sheet date.

The NNNAV or "triple net asset value" is the net asset value taking into account asset revaluations, the mark to market costs of debt and hedging instruments and any associated tax effect. Our investment properties are carried on our balance sheet at independent valuation and there is no associated tax liability. Our development and trading assets are carried at the lower of cost and net realisable value. We have not sought to value these assets as, in our opinion, they are at too early a stage in their development to provide a meaningful figure, so cost is equated to fair value for these purposes. On this basis, there is no material difference between our stated net asset value and NNNAV.

Revaluation

The Group's investment properties were independently valued by Jones Lang LaSalle as at 30 September 2011. In their opinion, the open market value of the investment property portfolio was £139.2 million. The total portfolio increased in value by £401,000 over the year.

Cashflow

The Group used £11.9 million cash in operating activities (2010: £15.5 million generated), of which £14.7 million was incurred as expenditure on development and trading properties.

The Group generated a further £13.5 million cash from the sale of investment properties and spent £24.6 million on the purchase of own shares resulting in an overall cash outflow of £31.6 million during the year. 

Net Income From Property Activities

Administrative Expenses

The administrative expenses for the year ended 30 September 2011 were £5.2 million, an increase of 73% from the previous year. The primary reasons for this are the profit share payment of £2.6 million to the executive directors and a reduction of £0.9 million in fees incurred in respect of abortive transactions. The majority of other costs arise as a result of the Group being quoted on AIM with no significant changes in 2011.

Taxation

The tax charge for the year of £0.7 million on the pre-tax profit of £1.8 million represents an effective tax charge of 39% (2010: 4.0%). Tax is payable at the full UK corporation tax rate of 27% on net rent income after deduction of finance costs and administrative expenses. The current year tax charge is higher owing to the preference share interest being non-deductible. There is no tax payable in respect of investment property capital gains or any reduction uplift, which is the main reason for the low effective tax rate in the prior year.

Financing

At 30 September 2011, the Group had cash of £35.7 million increasing to £62.6 million in November 2011 following a drawdown of £33 million from the Lloyds Banking Group facility. Following this drawdown, the Group has unutilised facilities of £22 million.

The bank debt at 30 September 2011 was £33.7 million increasing to £64.4 million in November 2011. This remains the only debt within the Group and is non-recourse to the parent company. The loan to value is 46% so there is capacity to raise further funding should it be required. This excludes any further finance that might be released from re-financing any cash funded acquisitions.

The interest rate risk on the facility continues to be managed by way of interest rate swaps. During November 2011, the Group re-couponed its existing interest rate swaps from 2.38% to 1.33%, having already reduced it during the year from 5.2%. This significantly reduces the ongoing interest rate charge in the income statement  whilst retaining the hedging protection. The fair value of these derivative financial instruments is provided for in full on the balance sheet.

The finance costs for the year amounted to £3.9 million (2010: £7.6 million), primarily consisting of £2.8 million bank loan interest (2010: £4.3 million). Loan repayment costs fell from £2.2 million to £48,000. Finance income amounted to £0.2 million (2010: £0.3 million) reflecting the low returns on short term cash deposits.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2011

All of the activities of the Group are classed as continuing.

CONSOLIDATED Statement of Changes in Equity

For the year ended 30 September 2011

CONSOLIDATED BALANCE SHEET

At 30 September 2011

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2011

NOTES TO THE ACCOUNTS

For the year ended 30 September 2011

1. The financial information set out in this announcement is abridged and does not constitute statutory accounts for the year ended 30 September 2011 but is derived from those financial statements. The financial information is not audited. The auditors have reported on the statutory accounts for the year ended 30 September 2011, their report was unqualified and did not contain statements under sections 498(2) or (3) of the Companies Act 2006, and these will be delivered to the Registrar of Companies following the Company's annual general meeting. The financial information has been prepared using the recognition and measurement principle of IFRS.

2. The comparative financial information for the year ended 30 September 2010 was derived from information extracted from the annual report and accounts for that period, which was prepared under IFRS and which has been filed with the UK Registrar of Companies. The auditors have reported on those accounts, their report was unqualified and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

3. Operating PROFIT

Operating profit is stated after charging:

4. PARTICULARS OF EMPLOYEES

The aggregate payroll costs of the above were:

The average monthly number of persons, including executive directors, employed by the Company during the year was seven (2010 - seven).

5. DIRECTORS' EMOLUMENTS

Emoluments includes a £2.65 million payment under the Conygar profit sharing plan (2010 - £nil). No (2010: one) director received a contribution to a defined contribution pension scheme in the year as part of a salary sacrifice arrangement.

The board of directors comprise the only persons having authority and responsibility for planning, directing and controlling the activities of the Group. In addition to the emoluments disclosed above, the Group incurred share based payment charges of £nil (2010: £434,000). The aggregate compensation of key management personnel as defined by IAS 24 "Related Party Disclosures" was therefore £3,550,000 (2010: £1,333,000).

6. OTHER GAINS AND LOSSES

7. FINANCE INCOME / COSTS

8. TAXATION ON ORDINARY ACTIVITIES

(a) Analysis of charge in the year

9. DIVIDENDS

The directors have recommended a final dividend of 1.1 pence per ordinary share in respect of the year ended 30 September 2011 (2010 - 1 pence). This final dividend will amount to £1,124,000 (2010: £1,175,000), if approved at the AGM. In accordance with IFRS, it has not been included as a liability in the financial statements. 

10. EARNINGS PER SHARE

The calculation of earnings per ordinary share is based on the profit after tax attributable to equity shareholders of £1,078,000 (2010 - £14,219,000) and on the number of shares in issue being the weighted average number of shares in issue during the period of 109,602,651 (2010 - 117,203,241). The diluted earnings per share calculation is based on profit for the year of £1,717,000 (2010 - £15,009,000) and on 119,171,352 (2010 - 129,720,010) ordinary shares and is non-dilutive. The diluted ordinary shares are calculated as follows:

11. PROPERTY, PLANT AND EQUIPMENT

12. INVESTMENT PROPERTIES

The historical cost of properties held at 30 September 2011 is £211,359,000 (2010: £233,328,000).

The properties were valued by Jones Lang LaSalle, independent valuers not connected with the Group, at 30 September 2011 at market value in accordance with the Practice Statements contained in the RICS Appraisal and Valuation Standards published by the Royal Institution of Chartered Surveyors which conform to international valuation standards.

The Group has pledged £105,085,000 (2010 - £112,310,000) of investment property to secure Lloyds Banking Group debt facilities and £34,065,000 (2010 - £35,235,000) to secure Capita debt facilities. Further details of these facilities are provided in note 28.

The property rental income earned from investment property, which is leased out under operating leases amounted to £13,010,000 (2010 - £15,099,000).

13. INVESTMENTS

Joint Ventures

The Group has a 50% interest in a joint venture, Conygar Stena Line Limited, which is a property development company. It also has a 50% interest in a joint venture, CM Sheffield Limited, which is a property trading company.

The following amounts represent the Group's 50% share of the assets and liabilities, and results of the joint ventures. They are included in the balance sheet and income statement:

There are no contingent liabilities relating to the Group's interest in joint ventures, and no contingent liabilities of the ventures themselves.

14. FIXED ASSET INVESTMENTS

Subsidiaries

The principal companies in which the Company's interest is more than 10% are as follows:

* Indirectly owned

15. GOODWILL

The goodwill arose upon the acquisition of the non-controlling interests in Martello Quays Limited and represents the excess of the consideration over the fair value of the identifiable net assets acquired. The goodwill has been wholly allocated to the development project within Martello Quays Limited, which is considered to represent a single income generating unit. The development project is still at an early stage, but management have prepared forecasts indicating that the net present value of the project exceeds its carrying value when discounted at the Group's weighted average cost of capital.

16. TRADING INVESTMENTS

17. PROPERTY INVENTORIES

18. TRADE AND OTHER RECEIVABLES

The directors consider that the carrying amount of trade and other receivables approximates to their fair value due to the short term nature of these financial assets.

19. TRADE AND OTHER PAYABLES

The directors consider that the carrying amounts of the trade and other payables approximate to their fair value due to the short period of repayment.

20. BANK LOANS

Details of the financial liabilities are given in note 28.

21. PREFERENCE SHARES

As part of the offer for The Advantage Property Income Trust Limited, the Company issued 62,902,335 convertible preference shares of £0.01 each of which 32,457,595 (2010: 62,313,045) were outstanding at the year end. The preference shares are convertible at any point into ordinary shares at the option of the preference shareholder. The conversion rate is one ordinary share for five preference shares. Any preference shares not converted are redeemable for £0.25 each on 31 December 2011.

Although equity share capital at law, the preference shares are classified as hybrid instruments under IFRS consisting of a discounted debt element of £0.20 per share and an equity element of £0.02 per share which

has been credited to an equity reserve. A notional interest element is charged to the income statement over the period to redemption.

The movement on the preference shares during the year was as follows:

22. SHARE CAPITAL

Authorised share capital:

Allotted and called up:

Amounts recorded as liability:

The Preference shares were issued in connection with the offer for The Advantage Property Income Trust

Limited. They are convertible at any stage into Ordinary shares. The conversion rate is one Ordinary

share for five Preference shares. Any Preference shares not converted are redeemable for £0.25 each on 31 December 2011.

During the year, the Company issued 5,971,090 (2010: 90,240) ordinary shares of £0.05 each in respect of conversions of 29,855,450 (2010: 451,200) preference shares. The carrying value of the liability which was treated as consideration for these issues was £6,885,000 (2010: £93,000) and £597,000 (2010: £9,000) was transferred from equity reserve to reflect the equity elements of the preference shares.

The resulting movement on the group's share capital during the year was as follows:

Allotted and Called Up

23. TREASURY SHARES

In December 2010, the Group began a share buyback programme and during the year ended 30 September 2011 purchased 21,237,981 shares on the open market at a cost of £24,649,000. All of these shares were held in treasury as at 30 September 2011.

24. ACQUISITIONS

On 24 November 2009, the Group acquired six Jersey-based companies (the "Lamont portfolio") which hold seven freehold and long leasehold buildings for a total cash consideration of £44,763,000 million. Although effected through the acquisition of separate legal entities, the Lamont portfolio does not in substance constitute a business combination as defined by IFRS 3 and has accordingly been treated as an asset purchase. The portfolio consisted of:

·; Brennan House, Farnborough Aerospace Centre, Hampshire

·; Three units at Aker Village, Kirkhill, Aberdeen

·; Cambridge Road, Whetstone Business Park, Leicester (sold during the year ended 30 September 2011)

·; Kelvin II, Kelvin Close, Birchwood Park, Warrington

·; Crystal Drive, Sandwell Business park, Oldbury, West Midlands

The annual rent roll was, at the time of acquisition, approximately £4.41 million representing a net initial yield of 9.8%. The buildings comprise 562,000 sq ft of lettable space and occupy some 47 acres.

The Group also acquired the remaining 2.15% of the issued share capital of The Advantage Property Income Trust Limited ("TAP") and thereby owned 100% of the issued share capital of the company by 8 January 2010.

The transaction was accounted for by the purchase method of accounting:

25. SHARE BASED PAYMENTS

No options were granted in either the current or prior year.

The Group and Company recognised total expenses of £nil (2010 - £434,000) in relation to equity settled share-based payment transactions. 

26. DEFERRED TAX ASSET

Deferred tax assets are recognised in the accounts as follows:

The deferred tax asset in respect of the trading losses carried forward has not been recognised on the basis that it is uncertain when taxable profits will be available for offset.

Movements on the recognised assets are as follows: